ASPPA Recommends Self Correction for Late Deferral Deposits

In a letter filed with the DoL’s Employee
Benefit Security Administration (EBSA), Craig P. Hoffman, General Counsel and Director of
Regulatory Affairs said: “ASPPA has been a strong supporter of the VFCP
since its inception; however, we believe it would be greatly improved by
the addition of a self-correction component that under certain
circumstances would allow employers to self-correct the late deposit of
elective deferrals. Plan sponsors, plan participants and DoL would all
significantly benefit by permitting this approach.

“We recommend adding a formal self-correction component
for the late deposit of deferrals. This component would allow employers
to correct in accordance with the current VFCP methodology without
having to file an application with the Department. Instead, the employer
would report that it self-corrected under VFCP and provide information
on the correction as an attachment to Schedule H or I for the Form 5500,
Annual Return/Report of Employee Benefit Plan.

“We believe this proposal would assist DoL’s goals of
ensuring timely deposits and in doing so protect plan participants and
plan assets. We also believe the proposal would provide the necessary
documentation and certainty that late deposits have been fully
corrected. By simplifying and expanding participation through a
self-correction component, DoL would be able to verify the important
role VFCP plays with respect to the many plan sponsors, who self-correct
in accordance with, and as a direct result of VFCP, but are not counted
in the ‘official’ statistics.”